In the ever-evolving landscape of cryptocurrency investment, MicroStrategy (MSTR) is positioning itself to potentially surpass Grayscale as one of the largest institutional holders of Bitcoin (BTC). As reported in its latest regulatory filing on September 20, MicroStrategy currently holds an impressive total of 252,220 bitcoins, which constitutes approximately 1.2% of the total Bitcoin supply capped at 21 million coins. This substantial holding highlights MicroStrategy’s commitment to Bitcoin as a core asset in its financial strategy.
In comparison, Grayscale, which has been a significant player in the Bitcoin investment space, previously managed over 620,000 bitcoins within its Bitcoin Trust (GBTC) prior to the launch of U.S. spot exchange-traded funds (ETFs) in January. Currently, Grayscale holds just over 254,000 bitcoins, distributed between GBTC and its newer, lower-fee Bitcoin Mini Trust (BTC). This shift in holdings raises questions about Grayscale’s strategy and future in the crypto market.
MicroStrategy’s aggressive capital-raising efforts have left the company with more than $1 billion in available funds that have yet to be deployed. While the company has not officially announced how it plans to use these funds, it is widely speculated that they will be invested in purchasing additional Bitcoin. Should this occur, MicroStrategy’s holdings could increase significantly, potentially positioning it above Grayscale in terms of Bitcoin ownership.
Should MicroStrategy continue on its current trajectory, it could emerge as the fifth largest holder of Bitcoin, trailing only major entities like BlackRock, Binance, Satoshi Nakamoto, and Coinbase. It is crucial to note that BlackRock, Binance, and Coinbase primarily hold Bitcoin on behalf of their clients, rather than for their own account. This distinction could impact the perceived stability and strategy of these holdings.
MicroStrategy’s journey into Bitcoin began under the leadership of its then-CEO and now Executive Chairman, Michael Saylor, who initiated the company’s Bitcoin purchasing strategy in August 2020. The company has since leveraged capital markets to raise billions, consistently adding to its Bitcoin reserves. Notably, the average purchase price of Bitcoin for MicroStrategy is just over $39,000, whereas Bitcoin’s current market price hovers around $64,000. This results in an impressive paper gain, with the value of MicroStrategy’s Bitcoin holdings now estimated to be around $16 billion.
On the other hand, Grayscale has faced challenges in maintaining its asset levels in the wake of the conversion of its GBTC into a spot ETF. Despite being a pioneer in providing public access to Bitcoin through its investment funds, Grayscale has opted to keep the management fee for GBTC relatively high at 1.50%. This fee is more than 100 basis points above its competitors, which has contributed to a quick decline in its assets under management.
In contrast, the Bitcoin Mini Trust, which offers a much more competitive fee structure at just 0.15%, has managed to attract new assets. However, as of the end of last week, its holdings still stood at only 33,753 bitcoins. This disparity in fee structures and asset growth raises critical questions about Grayscale’s long-term strategy and its ability to compete with lower-cost alternatives in the market.
In conclusion, the ongoing competition between MicroStrategy and Grayscale illustrates the dynamic nature of cryptocurrency investments. As MicroStrategy prepares to possibly expand its Bitcoin holdings, the implications for its market position and for Grayscale’s future remain to be seen. Investors and market observers will undoubtedly be watching closely to see how this narrative unfolds in the coming months.
